The board dismissed concerns over Burberry’s performance in China
Burberry (LON:BRBY) sales surged back during Q1 of its financial year as its locations opened back up on the easing of restrictions.
The luxury fashion brand also noted that it is attracting younger customers, thanks in part to its collaboration with model Kendall Jenner.
Burberry’s revenue, which felt the impact of the news that trusted CEO Marco Gobbetti would be leaving, stands at £479m for the quarter ending in June.
The board dismissed concerns over Burberry’s performance in China, as it, along with other western brands, found itself under pressure having condemned methods within the country to support the fashion industry.
In mainland China, Burberry said sales rose by more than 55% while sales in Korea are up more than 90% against pre-pandemic levels.
“This was driven by new, local, young customers buying across our core categories,” Burberry said in its trading update.
Chief executive Marco Gobbetti, who confirmed he will be leaving Burberry last month, said: “We saw strong growth across our strategic categories, in particular leather goods and outerwear, and exited markdowns in digital and mainline stores.”
“We continued to roll out our new store concept that will transform how customers experience our brand and product in a uniquely British luxury setting.”
“Despite the continuing challenging external environment, we are very pleased with the progress against our strategy. With the company firmly set on a path of growth and acceleration, we are confident of achieving our medium-term goals.”
“There’s a lot to like about today’s trading update from fashion label Burberry but perhaps the biggest plus point is the fact it is attracting new younger customers. This has positive implications of the long-term prospects of the business,” says Danni Hewson, financial analyst at AJ Bell.
“With this, plus good growth in traditionally strong areas like trench coats and handbags powering first quarter sales to pre-pandemic levels it’s a wonder investors aren’t more enthused.”
“The performance of the European part of the business is also disappointing when compared with a strong showing in the Americas and Asia,” Hewson added.
“Burberry will be hoping that the return of international tourism provides a renewed catalyst for sales growth given its traditional reliance on Asian tourists buying from flagship stores in Europe.”
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